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of <h1>Tribunal rules in favor of assessee, overturns transfer pricing adjustment.</h1> The Tribunal allowed the appeal filed by the assessee, setting aside the lower authorities' orders. The Tribunal found the TPO's assumption regarding the ... TP Adjustment - transaction of purchase of electricity by appellant company from Captive Power Plant (CPP) of the group company - HELD THAT:- As decided in own case [2015 (4) TMI 884 - ITAT AHMEDABAD] addition of Transfer Pricing adjustment need to be deleted as done by TPO. Thus the grounds raised by the assessee are hereby allowed. Issues Involved:1. Transfer Pricing Adjustment2. Arm's Length Price Determination3. Rejection of Tested Party by TPO4. Admissibility of Additional Submissions5. Consistency with Subsequent Year's Order6. Alleged Shifting of Losses7. Levy of Interest u/s 234A, 234B, 234C & 234D8. Initiation of Penalty Proceedings u/s 271(1)(c)Summary:1. Transfer Pricing Adjustment:The TPO disallowed expenses claimed by the assessee for the purchase of power from SAL Steel Ltd. (SSL) amounting to Rs. 10,75,03,219/-. The TPO's decision was based on the argument that the transaction was not at arm's length.2. Arm's Length Price Determination:The CIT(A) upheld the TPO's decision, stating that the assessee's choice of the tested party was incorrect and the power purchase was not at arm's length. The CIT(A) noted that the assessee's power plant and SSL's captive power plant had different operational contexts, affecting the arm's length price determination.3. Rejection of Tested Party by TPO:The CIT(A) confirmed the TPO's rejection of the tested party chosen by the assessee, citing that the choice was based on wrong assumptions and did not align with the functional and asset profile required for such a selection.4. Admissibility of Additional Submissions:The CIT(A) refused to admit additional submissions under Rule 46A, which were intended to justify the purchase price of power at arm's length.5. Consistency with Subsequent Year's Order:The assessee argued that for the subsequent Assessment Year 2015-16, the TPO did not make any transfer pricing adjustments on similar facts, suggesting an inconsistency in the TPO's approach.6. Alleged Shifting of Losses:The CIT(A) concluded that the group company, by charging a higher price, was attempting to shift its losses to the appellant company. The assessee countered that the price charged was marginally higher than the cost of production but lower than the rate from Uttar Gujarat Vij Company Ltd.7. Levy of Interest u/s 234A, 234B, 234C & 234D:The assessee contested the levy of interest under these sections, arguing it was unjustified.8. Initiation of Penalty Proceedings u/s 271(1)(c):The assessee also challenged the initiation of penalty proceedings under this section.Tribunal's Decision:The Tribunal found that the TPO's assumption regarding the transfer of electricity and the application of Section 80(IA)(8) was incorrect. The Tribunal noted that the power was transferred through Gujarat Energy Transmission Corporation Limited (GETCO) and the assessee paid applicable duties and taxes. The Tribunal also considered the consistency in the TPO's approach for the subsequent year and previous judicial decisions, including the Gujarat High Court's ruling in a similar case. Consequently, the Tribunal set aside the lower authorities' orders and deleted the addition of Rs. 10,75,03,219/- made by the TPO. The appeal filed by the assessee was allowed.
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